Wall Street is rolling over again despite a good start to the session with bond markets the culprit once more with some high yield auctions spooking the risk complex. A late swing to USD caused some extra unwanted volatility in currency markets as well, which all points to an interesting session here in Asia on the open today. The Australian dollar was firming post the RBA hold decision on its way up through the 66 cent level but has since reversed all those gains.
10 year Treasury yields were again on the rise, lifting more than 7 points to extend above the 3.9% level while oil prices reversed course again due to Middle East volatility with Brent crude lifting up through the $78USD per barrel level. After being unable to get back above the $2400USD per ounce level, gold prices have fallen again with a downtrend building momentum at the $2380 level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets have put in modest bumps higher as the Shanghai Composite moves up nearly 0.2% while the Hang Seng Index closed up nearly 1.5% higher to 16895 points.
The Hang Seng Index daily chart was starting to look more optimistic a few months back but price action has slid down from the 19000 point level and continues to deflate in a series of steps as the Chinese economy slows. A few false breakouts have all reversed course and another downside move is looming here as the 17000 point level is broken:
Meanwhile Japanese stock markets were able to reduce in overall volatility but continued to lift higher with the Nikkei 225 closing up 1% to 35089 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term support subsequently broke on that retracement, and then the front fell off. Futures are indicating a somewhat steadier session today but Yen volatility is still dragging this around:
Australian stocks only lifted slightly with the ASX200 closing just 0.25% higher to 7699 points.
SPI futures are down around 0.4% due to the dead cat bounce on Wall Street from overnight so we’re likely to see a reversion again in today’s session. Former medium term support at the 7700 point level will remain under pressure here as trader’s absorb the RBA’s signalling of no punchbowl for the rest of 2024, with a rollover underway as short term momentum inverts again:
European markets stabilised and then pushed broadly higher across the continent, with the Eurostoxx 50 Index zooming more than 2% higher to close at 4668 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance just unable to breach the 5000 point barrier. Instead, former ATR support at the 4900 point level was only a temporary anchor point as we go deep down into correction territory. Price must clear the 4700 local resistance level smartly to get out of trouble:
Wall Street was unable to follow through on its bounce back with the NASDAQ dropping more than 1% lower while the S&P500 closed 0.7% lower at 5199 points.
The four hourly chart illustrates this bounceback is still under short term resistance at the mid 5300 point level with momentum retracing from being overextended but now rolling over as it was unable to get into a positive mood. Watch out for more downside volatility here:
Currency markets were pushed around by some BOJ signalling that they would not make any further major moves in the market, which of course sparked a 200 pip selloff in Yen. After some stability from that, Treasury auctions saw a return to strength for King Dollar with most of the majors pulling back or stabilising. Euro held fire just above the 1.09 level as a result.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the week with more momentum building to the upside with the 1.0750 mid level as support but there was still too much pressure from King Dollar. This recovery about ATR support could still be unsustainable however so watch for this minor retracement to possibly gain momentum if support doesn’t hold at the 1.09 level:
The USDJPY remains on a downwards pattern as the carry trade unwinds but a early breakout post the Asian session overnight saw it move 200 pips higher to get back above the 147 level before moderating later in the session. There is still lots of life here! some notion stability maybe settling in as it held at the 144 level overnight following the 1000 pip move in the last week.
This volatility speaks volumes as it pushed aside the 158 level as longer term resistance in the weeks leading up to the BOJ rate hike. Momentum is suggesting a possible bottom is brewing but this maybe just catching knives at this point:
The Australian dollar is just holding on despite the RBA signalling no rate cuts for the rest of 2024 as it seems anchored to the 65 cent level although it tried in vain to push through the 66 cent level overnight.
During June the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone but that has changed in recent weeks with price action finally getting out of the mid 66 cent level that acted as a point of control. This still looks very weak with medium term support still broken but we could see a slow resurgence here:
Oil markets remain on a downward trend despite the looming Iran/Israel war and managed to bounce back somewhat overnight with Brent crude pushing up through the $78USD per barrel level in what could be a bottoming action.
After breaking out above the $83 level last month, price action had stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Daily ATR support had been broken with short term momentum still in oversold mode but watch for a potential follow through on this reversal as this swings into higher volatility:
Gold was trying to remain on trend as it absorbed this risk-wide volatility but is still finding it tough to get back above the $2400USD per ounce level after failing to clear key resistance at the $2450 level last Friday night. Price action is now rolling over back to last week’s lows to finish at the $2383 level overnight.
While it was the biggest casualty of the reaction to the recent US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level. The longer term support at the $2300 level remains key and while this looks like a good opportunity to buy the dip there is the potential for more downside here as short term support evaporates:
